UPDATE: Canaccord Genuity Reiterates Buy Rating, Lowers PT on Onyx Pharmaceuticals on Updated Valuation Analysis

In a report published Monday, Canaccord Genuity analyst Salveen Richter reiterated a Buy rating on

, but lowered the price target from $140.00 to $105.00. In the report, Canaccord Genuity noted, “Based on AMGN's unsolicited offer of $120/share (38% premium to ONXX' closing price on Friday, valuing ONXX at $8.7B), we are updating our valuation analysis. We are adding revenue from partner PFE's palbociclib in breast cancer (peak royalty (8%) of $315M or $16/share). In addition, we are reducing the discount factor on Kyprolis (peak sales of $2.1B), given a high likelihood of success of the P3 ASPIRE study (second-line multiple myeloma setting) per physician due diligence and data at ASCO (see below). As a result, we are raising our PT to $140 from $105 based on a DCF, as we believe this is fair value for the company (valuing ONXX at $10.2B) and concur with ONXX management that the current AMGN bid undervalues the company. We note our DCF contains no value for oprozomib (P1b/2 in MM), given the early stage of clinical development, which would represent upside (~$25+/share call option based on ~$500M peak sales) and provide a take-out valuation of $140+ ($140 - $165+). Given the stock will likely have an M&A put at these levels (~$120) going forward, and our expectation of a counter-offer from AMGN and emergence of other bidders (including partner Bayer, among others), we would be adding to positions at current levels. We also note that ONXX hired Clearview Partners to contact other potential acquirers.” Onyx Pharmaceuticals closed on Friday at $86.82.